The accounts receivable balance on June 30 is $12,000. Total sales for July are estimated to be
Question:
The accounts receivable balance on June 30 is $12,000. Total sales for July are estimated to be $90,000. Sales are typically 10% cash and 90% credit sales. Of the credit sales, 40% is collected in the month of sale and the other 60% in the subsequent month.
a. What are the total cash collections budgeted for July?
b. What amount would be reported as accounts receivable at the end of July?
c. The company is contemplating offering a 3% discount for credit sales collected in the same month as a sale is made. Management anticipates that the collection of credit sales would change as follows: 70% in the same month and 30% in the next month. Calculate total cash collections for July with the proposed change.
Step by Step Answer:
Managerial Accounting
ISBN: 9780137689453
1st Edition
Authors: Jennifer Cainas, Celina J. Jozsi, Kelly Richmond Pope